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Venture Capital News - Venture Capital News Headlines

Principal Spencer Hurst recently spoke with Buyouts to discuss navigating market uncertainties and value creation strategies in a slower economy. “We spend a lot of time developing and refining that go-to-market muscle, analyzing client white space and putting people at the company in charge of cross- and up-selling. One of the most cost-efficient ways of growing is to sell additional products to clients you have already acquired.” Read more by clicking the link below. #PrivateEquity #Investing #Tech

This article almost gets it right. VC returns are power law returns and the main distinguishing factor between "good" funds and "great" funds is finding a decacorn or many unicorns. The data is very complete-- in an illiquid market this is unpredictable. Doubling down on winners assumes some basic knowledge of winners and losers. But this is still largely luck. This also means that #ohio and the midwest likely get it wrong by trying to duplicate west coast venture models. There are many macroeconomic reasons the midwest shouldnt be focused on growing unicorns and decacorns--Lack of follow on and growth capital, few aquisition targets, and IPO competition with a geographicall concentrated deep investment market. The midwest has always assumed they should give incentives for companies to stay vs leave after early stage investments. This in fact may be incredibly backwards. The midwest may actually be a great place to start businesses due to low startup costs. (and incredibly cheap valuations) But if given the option should encourage companies to leave, with a liquidity option at Series A. There are many secondary markets that could buy these positions at a discount at Series A. (Like Morgan Stanley's $7B secondary market ) If the returns at a Series A exit were then compounded on a 3 year investment to exit fund cycle, we could mimic unicorn and decacorn home runs in a single fund with nice attributes. Below is a graph of an alternate fund model with 3 year returns, compounding multiples, and aligning with midwest macroeconomics. https://lnkd.in/eS8ryYwR

Interesting post by Howard (Lee) Mosbacker IV, PhD on changing VC thinking in non Silicon Valley ecosystems. And yes, things have got to change. Howard argues that we need an active secondary market for VC positions at Series A rather than wait for those companies to become Decacorns. I completely agree... to an extent. Those secondary markets already exist, however. They are called stock markets. Hear me out. The VC world is so obsessed with Decacorn NASDAQ listings, that they've forgotten what built our industry. CISCO, Nvidia, AMD, Adobe, Amazon, Intel, all IPOd at sub $500m valuations. Companies are now being advised to wait until they have $500 Million in ARR before listing. This is madness. To be fair, U.S. Securities and Exchange Commission rules and our litigious culture make a US IPO at a sub $1B valuation extremely difficult. Costs in the US are too high. Other global stock markets don't have that problem. For instance, on the LSEG (London Stock Exchange Group) AIM market companies regularly IPO doing $10-20m in ARR growing 30% a year. IPO costs are 30% vs US costs, the US has more class action shareholder lawsuits in a year than the LSEG (London Stock Exchange Group) has had in a decade. IN 2021, the LSEG (London Stock Exchange Group) had ~160 IPOs with an _average_ valuation of $100million. There's similar great small cap programs at the ASX, TSX Group and Euronext. The problem isn't the lack of a secondary market. The problem is that US VC's and board members don't look beyond the US to IPO. Maybe we should think outside of the box on this a little. BTW, I buy post Series B secondaries at Practical Venture Capital, and project manage small cap IPOs as a side hustle. You know... BYOL ( Bring Your Own Liquidity ) What would your fund's returns look like if you could get liquid at Series B?

2 key approaches for early stage VC Backed companies that are struggling with runway and follow-on raises. 1. Pivot away from Product Lead Growth (PLG) towards Sales Lead Growth (SLG) strategy. ie Return to (or learn to do) founder led sales. When markets shift, customer behaviour shifts. PLG can leave you flatfooted. SLG allows you to have highly insightful customer conversations. I might seem manual and inefficient if you're assessing it through lens of "scalability". But switch your perspective to the lens of "adapting to change", then SLG is comparably faster and more efficient than SLG. 2. Consider introducing Professional Service Offerings. ie Return to (or learn to) bootstrap. Delivering paid services can be highly valuable customer funded R&D to learn even more deeply where your markets are shifting. It can defray costs and help you keep the core team together. I think it was Vinod Kholsa that said "If I'm really investing in building a billion dollar business and I have to wait a couple of extra years, I really don't mind."

So is it all rainy days for venture’s seeking funding? Not for the one’s with the better business cases. This data validates what I hear daily from Early stage ventures that it’s more and more difficult now than the recent season of getting funding. No different than the public markets, private markets have corrections. As money became more expensive, investors are increasingly scrutinizing risk and return. If you‘ve been pitching and pitching to little success, take a hard look at your business case. Does your case show the investor fundamentally why they should choose you versus the many others they are seeing…And I’m not talking cleaver pitch design. 🚀 does your case show how they will make more money, faster with greater certainty? Hint…Show less how you are using the funds and show more how you are delivering returns with the funds. 🚀does your case show you are the team to bet on? Hint… not just who you are and your credentials but how I should believe you with a clear well thought “ plan to results. enabling ideas® Fast-tracking the journey. Start-up to Enterprise.

Venture Capital News - Venture Capital News Headlines

Venture Capital News - Venture Capital News Headlines

Private Equity and Venture Capital — both invest in private markets but their investment focus is quite different. A few comparisons: 🖥 Sector Focus -- VC: SaaS, Fintech, and Biotech driven -- PE: Traditional industries (Industrials, Services) still big in addition to Tech 🤑 Profitability -- VC: Focus is on growing 10x, still burning cash, big bets -- PE: Stable growth and cash flow positive 🌍 Regional Focus -- VC: Primarily large cities -- PE: Large cities + tier 2/3 towns 👵🏻 Company Age -- VC: Recently incorporated to ~15 years -- PE: ~30-35 years on average 💼 Dilution -- VC: 10-20% per round, many investors -- PE: Outright acquisition and majority control, 1-3 investors max ⏳ Holding Periods -- VC: >10-15 years on average before exit -- PE: 5-6 years on average 💲 Valuation metrics -- VC: A bet on the team and market initially, then user metrics and sales -- PE: EV/EBITDA and robust cash flow modeling 🏦 Financing -- VC: Primarily equity investments -- PE: Change of capital structure with significant debt 🚀 Exit routes and outcomes -- VC: Outliers (big wins 100x) with many companies closing -- PE: Moderate outcomes (1.5-5x) with most investments exiting What have I got wrong here? What would you add? P.S. Sharing the presentation of my recent webinar here. P. P.S. These are generalizations. Special cases and exceptions definitely exist. #pe #vc #investors

Here's the untold reality of attracting inward investment: Being adaptable to each client you meet! 🤝 No two companies are ever the same. Dealing with businesses at various stages—from startups to scale-ups to corporates—is no easy task. Each one has different needs, different requirements, and different success factors 💯. But the beauty lies in learning to adapt to what clients truly need 💪. Whether it’s through:  facilitating relationships with private equity or venture capital firms finding research and development partners for new AI-driven products,  introducing them to a niche community,  connecting with universities for grants & talent,  sourcing partners for a specific campaign, —or, honestly, even recommending a good pub spot/restaurant 🍔 when a major investor is in town. My colleague Chris Nixon summed it up nicely: “We’re the doorway to the West Midlands.” And it’s true in every sense. So, whether you're an SME looking to scale or a corporation seeking to innovate, we're here to adapt to your needs and help you succeed in the West Midlands. ________________________________________________________________________________ DM me or click the link below to find out more about our complimentary investor support services and to learn more about why the West Midlands is a top choice for strategic investment. 🌍 P.S Throwback to the first Tech Sector Dinner I organised with Mike Lewis starring none other than Jack Stockport 😂. #investment #growth #adaptability #WestMidlands #tech #fintech #wealthtech #insurtech #regtech #sme Photo Credit: West Midlands Growth Company